ISLAMABAD: The Competition Commission of Pakistan (CCP) in a policy note to the federal government recommended it to amend the Statutory Regulatory Order (SRO) 18(I)/2015 pertaining to 15 per cent regulatory duty on imported steel billets.

The reduction in regulatory duty on steel billets would create a level playing field in the market for end steel products, particularly high quality steel bars used in infrastructure development projects, the commission said in a statement issued on Wednesday.

In the steel industry, there are large scale integrated steel manufacturing units that produce their own billets and convert them into steel bars, and the non-integrated re-rolling mills that rely on local and imported steel billets to make the steel bars, the CCP said.

“The imposition of existing regulatory duty on import of steel billets disturbed the cascading nature of tariff structure previously introduced by the federal government, effectually putting non-integrated re-rolling mills at a competitive disadvantage vis-à-vis the integrated steel manufacturing units,” the commission said.

The statement went on to add: “The disproportionate duty structure in the steel industry is creating barriers to expansion for the existing re-rolling mills and barriers to entry for potential aspirants in this growing market.”

The CCP noted that the existing regulatory duty structure raised the prices of imported steel billets which impacted only non-integrated re-rolling mills and forced the latter to purchase billets from integrated players. Being downstream competitors of non-integrated re-rolling, integrated manufacturing units were unlikely to provide steel billets at competitive prices to the former, thereby placing them at a competitive disadvantage.

Published in Dawn, October 9th, 2015

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